Billionaire hedge fund manager, John Paulson, made his mark on Wall Street when the trader’s big bet against subprime mortgage debt made him a star, according to Svea Herbst-Bayliss of Reuters. Unfortunately, 2011 was not a stellar year for Paulson as his flagship fund, Advantage Plus Fund, was down 50% for the year.
Vowing to redeem himself, Paulson promised that this year would be different and all of last year’s losses would be largely regain. However, once again Paulson is struggling to churn out a profit for his funds. Advantage Plus fund was once again down 10% through May after the billionaire invested a lot of assets in gold.
A decade ago, no one talked about tail risk hedge funds, which were a minuscule niche of the market. However, today many large investors, including pension funds and other institutions, have mandates that require the inclusion of tail risk protection. In a recent interview with ValueWalk, Kris Sidial of tail risk fund Ambrus Group, a Read More
Paulson needs to get in touch with his inner trader again. For instance, Paulson was very bullish on financial stocks last year. Even though the losses piled and the environment, Paulson continued to hang on to those financials, until he sold them in December 2011. Well, less than a few weeks later, the great first quarter rally began and Paulson lost out on all of those profits that he would have gotten if he had just held his financial holdings.
John Paulson continues to have a loyal following during his rough time but Wall Street and some pension funds invested with him seem to be growing impatient and want the results that have been promised.
Right now, Paulson has told his clients that his team is looking greatly into any potential outcomes of the Eurozone crisis. The billionaire investor says that if Greece does end up exiting the Euro that European banks would be hit extremely hard along with the Euro. Additionally, the EU summit is expected to be a waste of time also which continues to paint a dark outlook for the Euro and certain countries such as Spain and Italy.
The bottom line here is that John Paulson is still in his slump. Unfortunately, we do not know when he will get out of the slump but luckily Paulson still has some loyal clients that have continued to stay with Paulson during these trying times. Right now, Wall Street appears to be critical of Paulson’s attempt to hit a home run again rather than attempting to establish solid gains. As with Paulson’s announcement about the Eurozone, Wall Street told him he was too late to the party but the hedge fund manager presses on. Lets see if Paulson is able to stake off the slump in the second half of 2012.